Macau's gaming revenue and development projects crucial to 2025 outlook for Las Vegas Sands corporation

Las Vegas Sands, one of the world's leading developers of integrated resorts, is expected to see significant growth in 2025, according to a recent analysis by Deutsche Bank.

The bank's predictions are based on a sum-of-the-parts approach, applying property-level multiples to estimated 2025 property-level cash flow to establish a firm value. This method has led Deutsche Bank to set a price target of $60 for Sands shares, following a year of trading around $50 to close 2024.

One of the key drivers of share gains on the mass side in 2025 will be the return of the revamped room portfolio at The Londoner, easy comparisons stemming from construction activity in the casino at the Londoner, and the return of the Venetian Arena and the programming around it. In Macau, a significant factor in the 2025 story for Las Vegas Sands, hotel room revenue is expected to get a boost from the new room and suite product coming online in the second quarter of 2025.

Deutsche Bank expects Sands to generate mid-single digit growth in mass gaming in 2025. In 2019, Sands had a 32.8% share of the mass-market gaming revenue in Macau, generating approximately $6.5 billion. Consensus forecasts a property EBITDA increase in Macau of $435 million in 2025 relative to 2024. Every 100 basis points of incremental share for Las Vegas Sands in 2025 would equate to $85 million of incremental EBITDA on the conservative side.

Sands is also expected to complete Phase II of The Londoner project by mid-2025 at a cost of $1.2 billion and Marina Bay Sands Phase II in Singapore for $750 million. These developments are expected to contribute to the company's growth in the coming years.

Santarelli, an analyst at Deutsche Bank, believes a recapture of some portion of the lost share in 2025 relative to 2019 will significantly impact the prospects for Sands shares in 2025. He also expects Sands to be a favorite in any greenfield environment due to its industry stature and balance sheet.

Deutsche Bank has recommended a Buy rating for Las Vegas Sands, citing potential development opportunities in New York, Texas, and Thailand. However, the current decision status in Thailand is that the new Prime Minister, Anutin Charnvirakul, has rejected gambling as an economic growth tool and vowed no casino policy reforms, signaling no support for integrated resort developments involving casinos like those by Las Vegas Sands in Thailand.

In the United States, New York's license applications are expected in the second quarter, and Texas has a possible referendum on the ballot in November. Santarelli expects Sands to generate roughly $6.2 billion of mass-gaming revenue in 2024, with a mass share in the 28% to 29% range.

While promotional spend has been lower, gaming revenue has also decreased. As of now, promotions represent 20.7% of gaming revenue for Las Vegas Sands, which is higher than the pre-pandemic level of 19%. Despite this, the bank remains optimistic about Sands' prospects in 2025.

Macau's gaming revenue and development projects crucial to 2025 outlook for Las Vegas Sands corporation